15May13

Amazon gets help to lure big business to the cloud

As Amazon.com Inc seeks to transform itself into a leading provider of technology to
the world's largest corporations, it's discovering that it needs help.

The online retailer, which since 2006 has moved aggressively into the business of
renting remote computing, storage and other IT services, is roping in thousands of
consulting and technology partners, from Cap Gemini SA to BMC Software Inc, in a
major push to woo big-spending corporate customers to its cloud computing division.

Amazon Web Services (AWS), as the business is known, has been a hit with startups
which need robust and inexpensive Web services that they can purchase as the need
arises.

But big corporations and government agencies, often referred to as enterprise
customers, represent a far larger opportunity: they spend more than $300 billion a year
on data centers, Bernstein Research estimates.

That market opportunity has helped Amazon's stock price more than triple in the past
five years as investors bet that the retailer's cloud computing services will become an
integral part of the way companies do business over the Internet.

Enterprises, however, are far more demanding than start-ups, requiring better service
guarantees, closer tracking of expenses, special features for regulatory compliance and
much more. Thus a network of middlemen who develop solutions that work on AWS
servers has become central to Amazon's strategy as it takes on established enterprise
technology giants such as Oracle Corp and International Business Machines Corp and
competes with newer cloud rivals Microsoft Corp and Google Inc.

"Businesses want a full dish to eat, while Amazon serves up ingredients and asks users
to get cooking," said Matt McIlwain, a partner at Madrona Venture Group. "Enterprises
are willing to pay to get the completed dish. Amazon recognizes this. That's why they
have created a network of partners."

Madrona, headed by long-time Amazon board member Tom Alberg, has invested in a
number of start-ups that help enterprises to use AWS and other cloud services,
including 2nd Watch, Apptio and Skytap.

AWS has more than 4,000 members in its partner network, up from fewer than 1,000 in
the first quarter of 2012, according to Terry Wise, its head of global business
development.

"If AWS didn't have this partner ecosystem, they would be struggling with enterprises,"
said Kyle Hilgendorf, who set up Eli Lilly & Co's cloud computing strategy before joining
technology research firm Gartner as research director.

"I get calls all the time from enterprises that want to use AWS. They say 'we wish that
they did X, Y or Z.' They often go to an AWS partner to fix these problems."

A study by Hilgendorf and his Gartner colleagues this year concluded that AWS meets
71 percent of what enterprises need to fully embrace public cloud computing.

"Partners understand enterprise customers better and can often paper over the cracks,"
said Mat Ellis, chief executive of Cloudability, which helps big companies such as
Adobe Systems track cloud spending.

Guaranteed Performance

One area where AWS falls short is so-called service-level agreements, or SLAs, which
guarantee IT services will keep running. If service is interrupted, the provider has to
compensate customers - and if it happens too often, they could become former
customers.

Consultants that work with AWS say its SLAs are not always adequate for the needs of
large enterprises. The one for AWS's popular "EC2" computing service, for example,
guarantees downtime will not exceed about 22 minutes a month, according to
calculations by Gartner and Cap Gemini.

Yet some enterprises require downtime to average no more than 5 minutes a month,
said Joe Coyle, Cap Gemini's chief technology officer in North America.

To fix this, Cap Gemini weaves together AWS servers in different regions around the
world to make sure that if one data center area goes down, the rest of the network
keeps running.

"We turn around and write a new contract with the client," Coyle said. "The client would
not even know they are on AWS if they didn't ask."

Cap Gemini has nine enterprises using AWS in this way, including intercity bus carrier
Greyhound Lines.

Other companies, such as start-up 2nd Watch, are also developing their own
approaches that guarantee less downtime than AWS itself.

The AWS partners can also help enterprises keep existing systems and have them
work with AWS, an increasingly popular strategy known as "AWS plus one."

Andy Jassy, head of AWS, said recently that enterprises can now use AWS and their
own data centers at the same time. Software firms including BMC and CA Inc can help
companies manage this through "a single pane of glass," he said.

The risk in this approach is that it makes it easier for enterprises to use rival cloud
providers. Indeed, many of the larger partners already have long-standing business
relationships with Amazon rivals.

RightScale, for example, a long-time AWS partner, helps enterprises run applications
on multiple cloud platforms, including those offered by Microsoft, Google,
Hewlett-Packard Co and Rackspace Inc.

[Source: By Alistair Barr, Reuters, San Francisco, 15May13]

This document has been published on 17May13 by the Equipo Nizkor and Derechos Human Rights. In accordance with
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